Building a Good Record

The best way to maintain your credit standing is to repay all debts
on time. But there may be complications. To protect your credit rating,
you should learn how to correct mistakes and resolve misunderstandings.

When there's a problem, first try to deal directly with the creditor.
Credit laws can help you settle your complaints without a hassle.

On your first attempt to get credit, you may face a common frustration:
sometimes it seems you have to already have credit to get credit. Some
creditors will look only at your salary and job and the other financial
information that you put on the application. But most also want to know
about your track record in handling credit, namely, how reliably you've
repaid past debts. They turn to the records kept by credit bureaus or
credit-reporting agencies, whose business is to collect, store, and report
information about borrowers that is routinely supplied by many lenders.
These records include the amount of credit you have received and how faithfully
you've repaid.
Here are several ways you can begin to build a good credit history:

1

Open a checking account or a savings account or both. These
do not begin your credit file but may be checked as evidence that
you have money and know how to manage it. Cancelled checks can be
used to show that you pay utilities or rent bills regularly, a sign
of reliability.

2

Apply for a department store credit card. Repaying credit
card bills on time is a plus in credit histories.

3

Ask whether you may deposit funds with a financial institution to serve as collateral for a credit card; some institutions will
issue a credit card with a credit limit usually no greater than
the amount on deposit.

4

If you're new in town, write for a summary of any credit record kept by a credit bureau in your former town. (Ask the bank or department
store in your old hometown for the name of the agency it reports
to.)

5

If you don't qualify on the basis of your own credit standing, offer to have someone cosign your application.

6

If you're turned down, find out why and try to resolve any
misunderstandings.